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29. FINANCIAL INSTRUMENTS
The group is exposed to credit risk, liquidity risk and market risk (currency risk and interest rate risk) from the use of financial instruments.
Overall responsibility for establishment and oversight of the risk management framework rests with the board of directors. The Risk Committee,
a committee of the board, is responsible for the development and monitoring of the group’s risk management process.
The group maintains an integrated, enterprise-wide, risk management programme (IRM). The group applies a logical, systematic and repetitive
methodology to identify, analyse, assess, treat and monitor all risks, whether they are insurable or not. The risk management process is
continuous, with well-defined steps, which support better decision-making by contributing a greater insight into risks and their impacts. Risks
from all sources are identified and once they pass the materiality threshold, a formal process begins in which causal factors and consequences
are identified and the correlation with other risks and the current risk-mitigating strategy is reviewed. One of the challenges is to ensure that
mitigating strategies are geared to deliver reliable and timely risk information to support better decision-making.
The risk assessment and reporting criteria are designed to provide the Executive Committee and the board, via the Risk Committee, with a
consistent, enterprise-wide perspective of the key risks. The reports which are submitted monthly to the Executive Committee and quarterly to the
Risk Committee include an assessment of the likelihood and impact of risks materialising, as well as risk mitigation initiatives and their effectiveness.
In conducting its review of the effectiveness of risk management, the board considers the key findings from the ongoing monitoring and
reporting processes, management assertions and independent assurance reports. The board also takes into account material changes and
trends in the risk profile and consider whether the control system, including reporting, adequately supports the board in achieving its risk
management objectives.
SIOC in conjunction with Anglo American SA Finance Limited (a subsidiary of the ultimate holding company) provide a treasury function to the
group, co-ordinates access to domestic and international financial markets, and manages the financial risks relating to the group’s operations.
MEASUREMENT BASIS OF FINANCIAL INSTRUMENTS
Fair value
Rand million
Notes
Amortised
cost
through
profit or loss Total
2011
Financial assets
Investments held by the environmental trust 4 285 283 568
Trade receivables 7 2,249 – 2,249
Other receivables (excluding VAT and prepayments) 7 248 – 248
Derivative financial instruments 7 – 90 90
Cash and cash equivalents 8 4,742 – 4,742
Financial liabilities
Interest-bearing borrowings 9 (3,191) – (3,191)
Trade payables 12 (1,672) – (1,672)
Other payables 12 (2,870) – (2,870)
Derivative financial instruments 12 – (14) (14)
(209) 359 150
2010
Financial assets
Investments held by the environmental trust 4 301 71 372
Trade receivables 7 2,058 – 2,058
Other receivables (excluding VAT and prepayments) 7 265 – 265
Derivative financial instruments 7 – 78 78
Cash and cash equivalents 8 4,855 – 4,855
Financial liabilities
Interest-bearing borrowings 9 (3,185) – (3,185)
Trade payables 12 (1,595) – (1,595)
Other payables 12 (1,510) – (1,510)
Derivative financial instruments 12 – (30) (30)
1,189 119 1,308
Audited annual financial statements
Annual Financial Statements 2011
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